Whole Life Insurance

Whole life insurance is a form of permanent life insurance. It is also the most well-known type of life insurance, according to the Insurance Information Institute. Like the majority of permanent life insurance policies, whole life insurance also provides a savings component, known as “cash value,” and lifetime protection — as long as the periodic premiums are paid, whole life insurance provides a death benefit after the named insured dies.

What are the Features and Benefits of Whole Life Insurance?

Besides providing a death benefit and cash component, whole life insurance policies offer several additional important features and benefits.

 The policy will remain in force for the life of the insured as longs as the periodic premiums are paid.

 The insurance company cannot cancel the policy for any reason other than non-payment. This means that your insurer cannot cancel your policy, even if you become terminally ill and are living in a nursing home or hospice.

 Once issued, your periodic premium remains level for the life of the policy. Your insurer cannot increase your rates as you age or develop serious illnesses.

 The whole life insurance policy has a cash value component that accumulates funds over time and earns interest that is specified in the policy contract. This means that over time you will accumulate cash that if needed, can be accessed via policy loans, withdrawals, or policy surrender.

How Much does Whole Life Insurance Cost?

Your cost for a whole life insurance policy is based on several aspects, including how much coverage you wish to buy. Additional factors such as your age, health, lifestyle, and occupation will likely have an effect on the premiums you pay.

With a typical whole life policy, you’ll normally be able to make your premiums monthly, quarterly, semi-annually, or annually. Most insurance companies also offer a single-pay option that allows the applicant to make a lump sum payment for a policy that is paid-in-full and typically results in a significant discount for the insurance policy.

What About Taxes?

According to the Internal Revenue Service, policyholders cannot deduct the premiums they pay for whole life insurance on your personal tax return. More importantly, however, your beneficiary will receive the benefit from the policy on a non-taxable basis. There are circumstances when the death benefit may be taxable if there is interest paid in addition to the death benefit.

Who should buy Whole Life Insurance?

Most insurance professionals recommend whole life insurance to clients who are looking for lifetime insurance coverage, the guarantee of a level death benefit and periodic premium, and a cash value component. Today, whole life is the insurance policy of choice for seniors who want to life insurance for final expenses because many companies offer whole life policies with lower death benefits, no medical exam, and many are willing to issue policies to individuals up to 85 years old.